Major
trade and other comprehensive economic reforms have led
to a robust performance of the Polish economy. A new WTO
report on the trade policies of Poland says that real GDP
in Poland has gone up by one quarter above pre-transition
levels and that GDP per capita averaged US$4,000 in 1999.
The report notes however that rural poverty and regional
development remain key problems.

Economic
reforms lead to robust performance of Polish economy Back
to top

The
report states that accession to the EU remains in the
forefront of Poland's economic and political goals and
that much of the ongoing reform process is being driven
by this objective. The report notes however that vigorous
pursuit of multilateral trade liberalization would
benefit Poland's long-term economic interest.

The
new WTO Secretariat report, along with a policy statement
by the Polish government, will serve as a basis for the
trade policy review of Poland which will take place on 3
and 5 July in the WTO Trade Policy Review Body.

While
Poland maintains a multi-stranded approach combining
multilateral, regional and bilateral initiatives, trade
liberalization in Poland has recently been largely
concentrated at the regional level, the report says. The
European Union (EU) - replacing the former COMECON area
as Poland's main trading partner - accounts for around
two-thirds of total merchandise exports and imports.
Preferential access for EU products is provided under the
Europe Agreement, whereby tariffs were eliminated on all
industrial goods from 1999, except steel and petroleum
products, abolished from 2000, and automobiles, which
will be removed from 2002. Special arrangements apply to
agricultural products.

The
report notes that the impact on net trade creation of
Poland's possible EU accession is not completely clear.
While Polish most-favoured-nation (MFN) tariffs would
fall on average by almost two-thirds (based on 1999
levels) following adoption of the EU's Common External
Tariff, agricultural assistance is likely to increase
significantly.

Poland
also has free-trade agreements with the European Free
Trade Association (EFTA), other Central European Free
Trade Agreement (CEFTA) parties as well as bilaterally
with the Baltic States, Turkey and Israel. Preferential
tariffs differ substantially between trading partners,
and in 1999 were, on average, less than half of Poland's
MFN tariffs.

External
trade is vital to the transformation of the Polish
economy, the report says. Increased access to competitive
imports following trade liberalization has facilitated
Poland's export-led growth. The share of merchandise
trade (exports and imports) to GDP increased from 38% in
1994 to 49% in 1997, before falling to 44% in 1999.
Manufactured products account for over three quarters of
Polish trade and export shares of these goods increased
from 59% in 1992 to 77% in 1998.

The
report notes however that import growth exceeded export
growth throughout the 1990s, and that exports, hit hard
by developments in Russia, contracted by 11% in 1999. As
a result, Poland's trade and current account deficits
widened considerably, approaching 9% of GDP in 1999.

Poland's
MFN tariffs averaged 15.9% (unweighted) in 1999, compared
with 6% on imports from the EU and other preferential
sources. Much higher tariffs, averaging 34.6%, apply to
imports from non-WTO countries. The report notes that
substantial tariff dispersion exists: MFN rates range
from zero to 293%. The report also notes that high tariff
escalation exists on food, beverages and tobacco, textile
and leather, and wood and wood products. The report
states that the existence of many different MFN rates,
often involving gradation at the one-decimal-point level,
as well as numerous preferential rates, complicated and
reduces the transparency of the tariff structure.

The
report says that agricultural assistance continues to be
a high priority in Poland. Agricultural support almost
doubled from 12% in 1991-93 to 23% in 1997-99. This, the
report notes, has assisted farmers, mainly at the expense
of consumers, and has probably affected economic
efficiency. Food prices, on average, were 27% above world
levels in 1999. Farm assistance is delivered by tariffs,
price support, supply control measures, credit and input
subsidies as well as direct outlays, including export
subsidies and deficiency payments recently introduced on
wheat. The main products assisted include cereals,
especially wheat and rye, pigmeat, eggs, sugar, poultry
and oilseeds. Tariff quotas introduced by Poland under
tariffication have been consistently under-utilized.

Industry
restructuring in Poland is continuing, facilitated by
reduced manufacturing assistance and trade
liberalization, especially allowing competition from EU
exporters. The report notes that impressive progress has
been achieved in privatization of state-owned enterprises
and in attracting foreign investment. Nevertheless,
state-owned enterprises remain significant in some key
sectors, such as hard-coal mining, steel, chemicals,
shipbuilding, electricity generation, sugar, liquor,
railway transport, and defence industries. Since 1998,
the government has accelerated privatization efforts and
aims at divesting 70% of remaining States assets by 2001.

In
the services sector, the report notes that Poland is
taking substantive privatization and de-regulation steps.
The de facto state monopoly on long-distance and local
telephone calls was terminated from 1999 and the
statutory monopoly on international calls and mobile
satellite services is to end from 2003. The digital phone
market is already open. In the financial sector, bank
privatization has accelerated since 1997, aided by
substantial foreign participation. Entry restrictions on
foreign banks and insurance companies, including
operation of branches, have been removed, subject to
enhanced prudential requirements.

Poland
was committed to introduce the provisions of the
Trade-Related Intellectual Property Rights (TRIPS)
Agreement by 2000, and under the Europe Agreement, to
providing intellectual protection and enforcement similar
to the EU. The report notes that according to the
authorities, Poland has had patent, trademark and
copyright legislation broadly consistent with
international standards for some time, and has
strengthened such protection by introducing new
legislation, such as on copyright in 1999. The report
notes however that more effective enforcement of
intellectual property rights remains a major challenge.
The incidence of imported pirated and counterfeit
products in Poland appears to be substantial.

Notes
to Editors

Trade
Policy Reviews are an exercise, mandated in the WTO
agreements, in which member countries trade and
related policies are examined and evaluated at regular
intervals. Significant developments which may have an
impact on the global trading system are also monitored.
For each review, two documents are prepared: a policy
statement by the government of the member under review,
and a detailed report written independently by the WTO
Secretariat. These two documents are then discussed by
the WTOs full membership in the Trade Policy Review
Body (TPRB). These documents and the proceedings of the
TPRBs meetings are published shortly afterwards.
Since 1995, when the WTO came into force, services and
trade-related aspects of intellectual property rights
have also been covered.

For
this review, the WTOs Secretariat report, together
with the policy statement prepared by Poland, will be
discussed by the Trade Policy Review Body on 3 and 5 July
2000. The Secretariat report covers the development of
all aspects of Poland's trade policies, including
domestic laws and regulations, the institutional
framework, trade policies by measure and by sector.

Attached
to this press release is a summary of the observations in
the Secretariat report and parts of the government's
policy statement. The Secretariat report and the
governments policy statement are available for the
press in the newsroom of the WTO internet site
(www.wto.org). These two documents and the minutes of the
TPRBs discussion and the Chairmans summing
up, will be published in hardback in due course and will
be available from the Secretariat, Centre William
Rappard, 154 rue de Lausanne, 1211 Geneva 21.

The
Republic of Poland continues to successfully pursue its
rapid transformation to a market economy. Led by major
trade and other comprehensive economic reforms, and based
on strong private sector development, the Polish economy
has performed robustly. Impressive growth rates since the
early 1990s have raised real GDP to one quarter above
pre-transition levels. GDP per capita averaged US$4,000
in 1999. Social indicators have also improved
substantially. Nevertheless, rural poverty and regional
development remain key problems.

Restoration
of macroeconomic balances and radical restructuring of
the economy have greatly contributed to Polands
economic prosperity. The private sector now accounts for
some three quarters of output. Foreign investment has
accelerated and added to growth.

Recent
Economic Performance and Outlook

The
Polish economy has shown resilience to external factors.
Despite an initial deep recession, the economy rebounded
quickly with faster growth from 1992. Pre-transition real
GDP was achieved by 1995, and subsequently growth has
averaged around 5% a year. Slower growth of 4% in
1998-99, due mainly to the Russian financial crisis and
the slowdown of the German economy, appears temporary,
with prospects again promising following successful
stabilization policies to control the contagion effects
of these external developments. Growth is expected to
accelerate in 2000 and 2001 to around 5% and 6%,
respectively, based on resumed double-digit export
growth.

Prudent
stabilization polices have been an important part of
Polands success. However, the fiscal deficit, which
had fallen to 1.3% of GDP in 1997, recently rose to 3-4%
of GDP. The budget deficit is projected to again fall in
2000, to about 2% of GDP. Inflation, although remaining
relatively high, fell to 7% in 1999, but may rise in the
short term, partly due to excise and VAT increases. High
interest rates were reduced from 24% in early 1998 to 13%
in early 1999 as the economy slowed. They were again
raised in September 1999 in response to a quickening of
the economy and rising inflationary pressures.

The
exchange rate was partially liberalized in 1991 when the
fixed rate was replaced with a crawling-peg system,
pegging the rate to an Euro/U.S. dollar currency basket.
From March 1999, the monthly rate of crawl was slowed to
0.3% and the margins widened to ▒ 15%. Significant
capital inflows  encouraged by high domestic
interest rates  and relatively high Polish
inflation rates led, until late 1999, to a substantial
real appreciation of the zloty, weakening external
competitiveness.

Poland's
trade and current account deficits have widened
considerably, approaching 9% of GDP in 1999. Import
growth exceeded export growth during the 1990s, and
exports, hit hard by developments in Russia, contracted
by 11% in 1999. Such deficits reflect imbalances between
domestic savings and investment. Poland has a healthy
capital account, buoyed by strong private investment
inflows. These have effectively financed Polands
current account deficits without raising public foreign
indebtedness. External reserves provide import cover of
six to eight months. External debt, assisted by
international debt restructuring deals, fell from 37% of
GDP in 1995 to 27% in 1999.

External
trade is vital to the transformation of the Polish
economy. Increased access to competitive imports
following trade liberalization has facilitated export-led
growth. The share of merchandise trade (exports and
imports) to GDP increased from 38% in 1994 to 49% in
1997, before falling to 44% in 1999. The European Union
(EU) has replaced the former COMECON area as
Polands main trading partner, accounting for around
two thirds of total merchandise exports and imports.
Manufactured products account for over three quarters of
Polish trade. Export shares of these goods increased from
59% in 1992 to 77% in 1998. Within manufacturing, the
export share of iron and steel and chemicals has fallen,
while that of machinery, transport equipment, and
consumer goods has risen significantly.

Poland
is a founding member of the WTO and grants at least
most-favoured-nation (MFN) treatment to all WTO Members.
It is an observer to the plurilateral Agreement on
Government Procurement. In the context of the Uruguay
Round, Poland bound its agricultural tariff and almost
all industrial tariffs; tariffs on products covered by
the Information Technology Agreement (ITA) are to be
phased to zero by 2002. Also, as part of its Uruguay
Round commitments, all non-tariff measures, including
variable levies, were converted into tariffs albeit at
high rates, and minimum market access was provided by
tariff quotas on agricultural products, including beef,
pork, poultry meat, milk, and certain fruit and
vegetables. Poland extended its initial GATS commitments
on services through its participation in the WTO
Agreements on basic telecommunication services and
financial services, although it is still to ratify the
Fifth Protocol.

Trade
liberalization in Poland has recently been largely
concentrated at the regional level. Preferential tariff
cuts within regional trading arrangements have exceeded
multilateral reductions. Preferential access for EU
products is provided under the Europe Agreement, whereby
tariffs were eliminated on all industrial goods from
1999, except steel, and petroleum products, abolished
from 2000, and automobiles, which are to be removed from
2002. Special arrangements apply to agricultural
products. Poland also has free-trade agreements with EFTA
member States, other CEFTA parties as well as bilaterally
with the Baltic States, Turkey, and Israel. Preferential
tariffs differ substantially between trading partners,
and in 1999 were, on average, less than half of
Polands MFN tariffs.

Following
OECD membership in 1996, and the commencement of EU
accession talks in March 1998, Polands reforms are
being driven largely by the objective of joining the EU
by 2003. This goal is significantly influencing
Polands economic and trade-related policies, which
are now being harmonized with those of the EU. This
requires comprehensive changes to institutional
arrangements as well as enactment of new laws and
regulations to achieve coherence with the EUs
acquis communautaire.

Poland
is already well integrated within Europe, especially the
EU, and this would clearly intensify following accession.
EU talks are well advanced in many areas. Poland adopted
a revised National Programme of Preparation for
Membership in the EU in May 1999, and screening of its
legislation for compatibility with EU law was completed
by November 1999. Negotiations, however, are still
pending in several important areas, such as agriculture,
environment, and movement of people.

The
impact on net trade creation of Polands possible EU
accession is not completely clear. While Polish MFN
tariffs would fall by almost two thirds (based on 1999
levels) following adoption of the EUs Common
External Tariff, agricultural assistance is likely to
increase significantly. Further, the widening sectoral
disparities in assistance between manufacturing and
agriculture might hamper the efficient allocation of
resources in Poland.

Further
integration with the EU should accelerate Polands
economic development and provide renewed opportunities
and impetus for more comprehensive trade, investment, and
other economic reforms. The extension of regional trade
preferences on a non-discriminatory basis and securing
them in the multilateral framework should maximize the
benefits to Poland from trade liberalization.

Polands
GSP scheme exempts many products, such as textiles, from
preferential treatment. On average, preferential tariff
margins on imports from developing and least-developed
countries are limited; generally these countries receive
less favourable access than Polands regional
trading partners.

Trade
and Related Policy Measures

Poland's
MFN tariffs averaged 15.9% (unweighted) in 1999, compared
with 6% on imports from the EU and other preferential
sources; 14.1% on imports from developing countries; and
9.9% from least developed country suppliers. Much higher
tariffs, averaging 34.6%, apply to imports from non-WTO
countries. The tariff surcharge, introduced on all
imports for balance-of-payments reasons in 1994, was
progressively lowered from 6% to 3% and abolished as from
1997.

Substantial
tariff dispersion exists. MFN rates range from zero to
293%, with a standard deviation of 24 percentage points.
High tariff escalation exists on food, beverages and
tobacco; textile and leather; and wood and wood products.
Tariff transparency is improved by the high incidence
(over 90%) of ad valorem tariff rates. However, the
existence of many different MFN rates, often involving
gradation at the one-decimal-point level, as well as
numerous preferential rates, complicates and reduces the
transparency of the tariff structure.

Almost
94% of Poland's tariff lines are bound. Poland adopted
ceiling bindings for many products, exceeding, on
average, MFN applied rates in 1999 by 25%, and by almost
66% on agricultural products. This gap provides scope to
raise duties in the future, but affects the
predictability of the tariff system. Poland recently used
this leeway to substantially raise applied tariffs, to
bound levels, on a range of agricultural products, such
as wheat, butter, sugar, rapeseed, and pigmeat.

Customs
clearance fees are generally ad valorem, not linked to
the services provided. Some fees were eliminated in June
1999; the rest will be removed by 2001, except for those
maintained by the EU. VAT and excise taxes levied on some
imports appear to be discriminatory with lower rates
levied on domestic products, such as clothing, where
local products are exempt from excise duties while
imports are taxed at 20%.

The
new Customs Code of 1997 and the Customs Services
(Administration) Act of 1999 provide an important
framework for improving customs administration. However,
customs clearances still frequently involve long delays
and there are suggestions of inconsistent treatment. A
computerized system is being introduced, and customs
control is to be based on risk analysis.

Most
import bans and quotas, such as on petroleum products,
have been removed. Poland prohibits imports of used
passenger and commercial vehicles older than ten and six
years, respectively, for health and environmental
reasons. These are to be eliminated by 2002. Import
licensing also applies to petroleum oils and gases;
certain vehicle engines and other components for
assembly; some food products; gelatine for industrial
use; alcoholic beverages; and tobacco products.

Tariff
quotas apply to a wide range of imports. "First
come, first served" global tariff quotas were
implemented in July 1995 on many agricultural imports as
part of tariffication. Many of these quotas have been
consistently and substantially underutilized. Poland has
also applied bilateral tariff quotas on agricultural
imports from regional trading partners. Tariff quotas,
including on a bilateral basis, also apply to certain
manufactured goods.

Poland
maintains mandatory health and safety standards 
the B certificate  on many products to protect
consumer interests. Many Polish standards are not related
to international norms. Although the list of products
covered by mandatory B certification was halved in 1997,
the requirement still applies to about one third of all
goods marketed in Poland.

Of
18,000 Polish standards in 1999, some 75% complied with
EU norms; 15% with international norms not adopted by the
EU; and 10% were Polish-designed. Poland aims to have at
least 80% of standards harmonized with EU norms by 2002,
and to adopt EU requirements where different from
international norms.

Poland
maintains strict quarantine and other SPS regulations
affecting food imports, such as live animals and related
products, vegetables, and fruit. Poland has signed
several bilateral agreements concerning SPS matters since
1992. New regulations, including labelling requirements
apply to imports of genetically modified food since
November 1999.

Poland
has taken import contingency measures, including
anti-dumping duties, import quotas and licensing
requirements, on a range of products, such as steel,
footwear, and chemicals. Although Poland's use of general
safeguard measures has been limited, it has frequently
invoked specific safeguard action, mainly on agricultural
imports, under its WTO and bilateral agreements.

Various
adjustment and regional assistance schemes provide
financial assistance, such as grants, loans, tax
concessions, and loan guarantees, to promote industry
restructuring. Such arrangements have been applied in
iron and steel, chemicals, transport, machinery, food
processing, energy, construction, and pharmaceuticals.
National price preferences of 20% apply to government
procurement contracts for goods and services, including
construction. Domestic suppliers must source at least 50%
of raw materials or construction costs locally.

Poland
maintains, at least intermittently, export quotas and
bans, on a number of products, such as animal skins and
hides as well as non-ferrous scrap, aimed at protecting
domestic supplies. These assist downstream processors,
such as footwear manufacturers, by lowering input prices
below world levels. Poland also monitors certain steel
exports to the EU to counteract, according to
authorities, the threat of anti-dumping proceedings.
Several Polish exporters are also party to price and
volume undertakings on exports to the EU.

Export
insurance and guarantees are provided by the
government-owned Export Credit Insurance Corporation.
Export promotion and finance, including loans and loan
guarantees, are also available. Poland has 17 special
economic zones and eight foreign trade zones that provide
incentives. The new Customs Code provides for duty
drawback or suspension on imported inputs processed for
export. Exporters also benefit from investment-related
tax rebates that preferentially tax export income.

EU
norms have been used to model Polands competition
policies. Existing legislation prohibits monopolistic
practices, including abuse of dominant market position,
defined as market share exceeding 40%. Mergers are
prohibited if they create or strengthen a firms
dominant market position. Polands competition law
does not yet contain corresponding EU regulations on
state aid, and comprehensive information is unavailable.
New legislation aimed at full conformity with EU
requirements on competition and consumer protection is
due to be introduced in 2000.

Poland
was committed to introduce the provisions of the TRIPS
Agreement by 2000, and under the Europe Agreement, to
providing intellectual protection and enforcement similar
to the EU. According to the authorities, Poland has had
patent, trade mark and copyright legislation broadly
consistent with international standards for some time,
and has strengthened such protection by introducing new
legislation, such as on copyright in 1999. A new
industrial property law is also envisaged.

More
effective enforcement of intellectual property rights
remains a major challenge. The incidence of imported
pirated and counterfeit products in Poland appears to be
substantial. Strengthened legislative provisions over
customs seizure of such goods is being introduced. Since
1999, Polish customs have been able to seize suspected
goods without first requiring an application from the
right holder. Parallel imports are not permitted.

Sectoral
Developments

Agricultural
assistance continues to be a high policy priority in
Poland. Agricultural support almost doubled (on a PSE
basis) from 12% in 1991-93 to 23% in 1997-99. The PSE
further increased in 1999 to 25%, compared to
pre-transformation levels in 1986-88 of 29%. This has
assisted farmers, mainly at the expense of consumers, and
has probably affected economic efficiency. Food prices,
on average, were 27% above world levels in 1999. Income
transfers from Polish consumers in 1999 amounted to Zl
10.6 billion and from taxpayers Zl 3.9 billion. Total
transfers to farmers represented 2.4% of GDP.

Farm
assistance is delivered by tariffs, price support, supply
control measures, credit and input subsidies as well as
direct outlays, including export subsidies and deficiency
payments recently introduced on wheat. The main products
assisted include cereals, especially wheat and rye,
pigmeat, eggs, sugar, poultry, and oilseeds. The
Agricultural Market Agency intervenes to provide market
price support to selected commodities.

Poland
has sectoral policies for certain manufactured products,
such as transport equipment. Relatively high tariff
assistance, including duty-free importation of component
kits, was used to encourage motor vehicle assembly, and
licensing arrangements were introduced in 1996 to
encourage vehicle production.

Industry
restructuring in Poland is continuing, facilitated by
reduced manufacturing assistance and trade
liberalization, especially allowing competition from EU
exporters. Remarkable progress has been achieved in
privatization of state-owned enterprises and in
attracting foreign investment. Nevertheless, state-owned
enterprises remain significant in some key sectors, such
as hard-coal mining, steel, chemicals, shipbuilding,
electricity generation, sugar, liquor, railway transport,
and defence industries. The Government has accelerated
privatization efforts since 1998, aimed at divesting 70%
of remaining State assets by 2001. Priority areas for
privatization include financial and telecommunication
services, and key utilities, such as electricity.

The
efficient provision of business services, including
finance and telecommunications, are essential for private
sector development. Poland is taking substantive steps to
privatize the provision of such services and to
de-regulate such markets. The (de facto) state monopoly
on long-distance and local telephone calls was terminated
from 1999, and for domestic telex and telegraphic
services from 2000. The statutory monopoly on
international calls and mobile satellite services is to
end from 2003. The digital phone market is already open.
Privatization of the national state-owned carrier, TPSA,
began in 1998, and is intended to increase. New
legislation and a regulatory regime are being established
to control anti-competitive practices and to ensure
interconnection for new licensed entrants and the
provision of universal service.

Bank
privatization has accelerated since 1997, aided by
substantial foreign participation. Entry restrictions on
foreign banks and insurance companies, including
operation of branches, have been removed, subject to
enhanced prudential requirements. No limits exist on the
number of foreign licences issued.

Trade
Policy and Foreign Trading Partners

Poland
is an active participant in the WTO, of which it is a
founding Member. Poland extends at least MFN treatment to
all Members and almost all of its tariff is bound. Trade
policy is grounded in WTO commitments and trade
liberalization, in support of ongoing economic reform, is
an important objective.

Accession
to the EU remains in the forefront of Poland's economic
and political goals. Indeed, much of the ongoing reform
process is being driven by this objective. Under EU
accession, Poland's industrial tariffs would decline
substantially but agricultural assistance is likely to
increase, perhaps raising questions about net trade
creation.

Poland
has a large and expanding network of preferential trade
agreements, with the average tariff under such agreements
considerably less than Poland's average applied MFN rate.
Concerns that partners might have about this disparity
 and its possible effects on domestic resource
allocation  could be allayed by a certain
multilateralization of preferences.

1.
Since the beginning of the 1990s Polands trade
policy has been characterized by a broad process of
regional and multilateral liberalization. In subsequent
years Poland negotiated several free trade agreements
with its trading partners and implemented the
multilateral agreements of the Uruguay Round.

2.
Foreign trade liberalization has become a key instrument
for building a market economy system and integrating
Polands economy into the world economy. A broad
opening of Polish economy to the world economy has been
an important component of the transformation package
implemented since autumn 1989.

3.
Import liberalization was considered as an important
instrument to accelerate price reform, to encourage
competition, reduce inflation and, by these means, to
overcome the inefficiencies of central planning and
ensure adequate market functioning. Increased competition
resulting from import liberalization was also to speed up
demonopolization, improve resource allocation, generate
economies of scale, attract the FDI and thus to
contribute to faster growth. It was also expected that
import liberalization would stimulate the upgrading of
the national economy technological level and,
subsequently, enhance export potential.

4.
The integration with the European Communities due to its
economic, technological and political potential was to
play the most important role. CEFTA agreement was
motivated first of all by expected economic benefits
related to trade liberalization and enhanced by close
geographical position of the member countries. This
Agreement was also necessary to avoid discrimination of
mutual trade that would have resulted from bilateral free
trade agreements of individual CEFTA countries with the
EU. Other free trade agreements have constituted the
elements of the adjustment process of Polands trade
policy to the future adoption of EU common external
relations.

5.
Parallel to regional liberalization Poland actively
participated in the Uruguay Round negotiations and
submitted its own contributions. Since the entering into
force of the WTO Poland has been vigorously implementing
the Uruguay Round Agreements. The comprehensive rules on
economic relations have created a benchmark for policy
making in Poland, i.e. they have been playing the role of
an external anchor for the systemic transformation in
Poland.

(2)
Regional agreements

6.
The Europe Agreement on association with the European
Communities was signed on 16 December 1991. It has
provided for the gradual creation of free trade area in
industrial trade, modest reduction of trade barriers in
agricultural trade, progressive liberalization in trade
in services and flow of capital, as well as the
approximation of Polish laws to the EC acquis
communautaire. Its commercial part entered into force on
1 March 1992 and other provisions on 1 February 1994. In
1993 free trade areas began to be created with CEFTA and
EFTA countries on the basis of respective agreements.

7.
In the next years new free trade agreements were
negotiated with other partners (see Table 1). All of them
are modeled after the trade part of the Europe Agreement
and concentrate on the creation of free trade areas in
industrial products and certain liberalization of
agricultural trade.

8.
By 1 January 1999, tariffs had been abolished on almost
all industrial products imported from the EU (except
mainly for cars; tariffs on these items are to be removed
by 1 January 2002) and on the majority of industrial
products coming from other countries - parties to free
trade arrangements. Remaining tariffs will be eliminated
under all free trade agreements by the beginning of 2002,
at the latest.

Table
1 Back
to topFree
trade agreements negotiated by Poland with its trading
partners in the 1990s

Country

Date
of signing

Date
of entering into force

European
Communities

Europe
Agreement establishing an Association between the
Republic of Poland, of the one part, and the
European Communities and their Member States, of
the other part  16 December 1991

Commercial
part (Interim Agreement on Trade and Trade
Related Matters between the Republic of Poland
and European Community and European Coal and
Steel Community entered into force on
1 March 1992 (Dz. U.(1)1992
No 17, item 69), and the whole Europe Agreement
on 1 February 1994.( Dz. U. 1994 No 11,
item 38)

Agreement
between the Republic of Poland and Member States
of the European Free Trade Association signed on
10 December 1992, Dz. U. 1994 No. 129, item 639

15
November 1993

Republic
of Slovenia

Agreement
on accession of the Republic of Slovenia to CEFTA
signed on 25 November 1995

1
January 1996

Republic
of Lithuania

Free
trade agreement between the Republic of Poland
and the Republic of Lithuania signed on
27 June 1996, Dz. U. 1996 No 158, item 807

1
January1997

Republic
of Romania

Agreement
on accession of the Republic of Romania to CEFTA
signed on 12 April 1997

1
July 1997

Republic
of Bulgaria

Agreement
on accession of the Republic of Bulgaria to CEFTA
signed on 17 July 1998

1
January1999

Republic
of Latvia

Free
trade agreement between the Republic of Poland
and the Republic of Latvia signed on
28 April 1997, Dz. U. 1999 No 63, item 709

1
June 1999

Republic
of Estonia

Free
trade agreement between the Republic of Poland
and the Republic of Estonia signed on
5 November 1998

Not
ratified yet, applied provisionally since
1 January 1999

State
of Israel

Free
trade agreement between the Republic of Poland
and the State of Israel signed on 21July 1997,
Dz. U. 1999 No 63, item 707

1
June 1999

Faeroe
Iceland

Free
trade agreement between the Republic of Poland
and the Kingdom of Denmark and Faeroe Icelands,
signed on 3 November 1998, Dz. U. 1999 No 63,
item 705

1
June 1999

Republic
of Turkey

Free
trade agreement between the Republic of Poland
and the Republic of Turkey signed on 4 October
1999

1
May 2000

(1)Dziennik
Ustaw  Official Gazette of the Republic of Poland.
Back
to text

(3)
Implementation ot the WTO agreements relating to trade in
goods

9.
Poland became a founding member of the WTO on 1 July
1995, however the first tariff cuts on industrial imports
from WTO members were introduced on 1 January 1995.
Tariff commitments on industrial products included
binding of 96% of tariff lines (main exceptions being
motor vehicles, oil and linen products) and an average
reduction of tariffs level by 38%. Agricultural products
were subject to tariffication, tariff binding and then
reduction of tariffs by 36% over six years.

10.
Most tariff reductions on industrial products entered
into force in 3-5 annual stages, the last cuts on most
sensitive items (including textiles) will become
effective in 2001. Tariffs on agricultural products were
reduced in 6 equal installments by the beginning of 2000.

11.
Poland also participated in the Information Technology
Agreement of 1997. Under this Agreement additional tariff
cuts were implemented on computers, semiconductors,
telecommunication equipment, software, etc.

(i)
Tariffs
12. After the suspension of most tariffs in the first
half of 1990  aimed mainly at combating extremely
high inflation  Poland introduced new customs
tariff in August 1991. The then introduced customs duties
 mostly unchanged  became the basis for
tariff reductions negotiated later with many trading
partners.

13.
As a result of regional and multilateral liberalization
the level of tariffs has decreased substantially. The
average weighted tariff on all industrial imports
amounted to 2.2% in 1999. About two thirds of industrial
imports (imports from the EU and other countries covered
by free trade agreements) have been duty free since the
beginning of 1999. Thus, the average tariffs on remaining
imports (from countries subject to MFN duty and from
developing countries subject to GSP scheme) amounted to
5.5% (Table 2).

14.
Tariffs on agricultural products remain higher than on
industrial goods. The weighted average duty (including
suspensions) on agricultural imports from the EU reached
18.1% in 1999, 11.6% on imports from CEFTA countries and
12.7% on other agricultural imports.

15.
Poland offers GSP preferences to 45 developing countries
(DEVs) with a lower GDP per capita than itself and to 49
countries considered as least-developed countries (LDCs).
Tariff rates on imports from DEVs amount to 80% of the
MFN level. Imports from LDCs are duty free. However,
certain products considered as sensitive ones are
excluded from the concession schemes for DEVs and LDCs,
including some agricultural and textile products,
cosmetics, cars.

16.
The level of tariff protection, apart from preferences
offered to trade partners, is also affected by duty
suspensions and tariff quotas within which a reduced or
zero per cent customs rate applies. Suspensions have been
applied occasionally on agricultural products in shortage
on domestic market and on certain industrial components
and supplies in order to reduce the costs of
manufacturing, e.g. on raw materials and parts for
textile, leather, petrochemical, electronic and paper
industries. Tariff quotas result from Polands WTO
commitments (on agricultural products) or free-trade
agreements (e.g. on motor vehicles), or are introduced
autonomously for economic and social reasons (e.g. on
pharmaceutical products, bunker fuel, gluten-free
foodstuffs for children). With the general reduction of
the level of import tariffs the number of autonomous
suspensions and tariff quotas has been decreasing.

Table
2Back
to topAverage
weighted import tariffs in Poland in 1999(in
%, according to the 1998 commodity pattern of imports)

17.
In order to enjoy preferential access to the Polish
market foreign exporter is required to present documents
confirming the origin of the product from the country
eligible for preferences. In the case of the European
Union, EFTA, CEFTA, the Baltic countries and Turkey, the
system of pan-European cumulation of rules of origin
applies. The system facilitates the refund of customs
duties on components originating in any of these
countries and used in the production of export goods.

18.
The currently negotiated Polands membership in the
EU and the future adoption of the EU external tariff will
affect significantly the level of import tariffs. Tariffs
on industrial products will be reduced. Applied tariff
protection of agricultural products will decrease or
increase depending on the product. Polish import tariffs
are lower than the EU external tariffs on cereals, milk
products, bananas, some fruits etc. Higher tariffs are on
products like tobacco, most alcoholic beverages, apples,
certain types of potatoes, certain meat products, black
tea, etc.

19.
The adoption of the EU preferences system for DEV and LDC
will extend substantially the number of countries
eligible for tariff preferences.

20.
Quantitative restrictions are applied in Poland to a very
limited extent. The most restrictive measures 
prohibitions  have been used for the protection of
the health of consumers and animals (in imports of some
food products imported from certain European countries),
the protection of the environment (in imports of certain
used vehicles and bodies and chassis for such vehicles,
two-stroke engines and vehicles equipped with such
engines) or the protection of genetic material (in
exports of live geese and goose eggs). The prohibition
applied to imports of used combine harvesters introduced
in July 1994 was lifted on 1 January 1997. Ban on imports
of spirits and unflavored vodkas introduced in 1991, by
force of the WTO Agreement on Agriculture, was abolished
on 1 July 1995.

21.
In connection with accession to international conventions
on substances damaging the ozone layer, Poland applies
until the end of 2001 a temporary ban or automatic
registration of turnover with abroad in these substances
and in goods containing such substances.

22.
Some restrictions in foreign trade result from political
reasons, to mention the ban on the exports of land
anti-infantry mines or particularly tight control of
turnover in some goods and technologies.

23.
The quotas introduced for the protection of the domestic
industry have been systematically liberalized. Import
quotas introduced on some goods in 1991 were gradually
increased and then abolished: on alcohol and tobacco
products on 1 July 1995 as a result of the tariffication
of non-tariff barriers in trade of agricultural products,
on petrol, fuel oil and heating oil at the beginning of
1997. In 1998-1999 Poland also removed quantitative
restrictions in exports of raw skins and hides wastes and
ferrous and non-ferrous scrap and waste introduced in
1993-1994 in order to secure the raw materials for the
steel and leather industries.

24.
Poland applied quotas on exports of textiles and clothing
as a result of the agreements signed with the United
States, Canada, the EC and Norway within the MFA. The
restrictions on exports to the EU and Norway were
abolished at the end of 1997. The quotas in Polish
exports to the United States and Canada will be continued
by the end of 2004. More favorable regulations concerning
exports of textiles and clothing to the EU and Norway
were possible thanks to the signing of free trade
agreements. The limits in exports to Turkey introduced in
January 1996 followed the entry into force of the customs
union of this country with the EU and expired with the
abolishment of quotas in exports to the EU.

25.
Foreign trade in specific products still needs special
licences but since 1992 the number of goods subject to
this requirement has been steadily decreasing. At present
licences are required for the following items: arms and
ammunition for purposes other than military or police
use, explosives and pyrotechnic materials (in imports and
exports), alcoholic beverages, tobacco products, oil
products as well as parts for industrial assembly of cars
and tractors (in imports). The licences are issued by the
Ministry of Economy to all operators that fulfill the
criteria established in the relevant legislation.

26.
Some goods require a permit for imports or exports. These
are goods covered by quotas, automatic or non-automatic
registration of turnover, goods which require a license
to be object of foreign trade.

(b)
Measures against unfair and excessive imports

27.
With a decreasing border protection the Polish industry
has been facing a growing foreign competition. At the
same time Polish exporters have met market access
barriers in many countries, mainly anti-dumping
proceedings and duties. Such experience has resulted in a
greater interest of Polish producers in searching similar
remedies against foreign competition.

28.
Respective measures are available under new laws on the
protection of the Polish customs territory against
excessive imports and imports at dumped prices which came
in force at the beginning of 1998, in compliance with WTO
principles and other international agreements signed by
Poland. Relevant procedures are undertaken by the
Minister of Economy upon a documented complaint submitted
by domestic producers representing at least 25% of the
domestic production of a given product. Thought the
Minister can undertake a procedure ex officio, he hardly
ever does it in practice.

29.
The protective measures against dumped or excessive
imports may be applied only when certain requirements are
met i.e. the proving in a special investigation an injury
and/or its threat to the domestic industry and its casual
link with disputed imports. The safeguard measures should
be treated as exceptional and be progressively
liberalized. Decisions on the adoption of protective
measures are taken by the Minister of Economy after
consultation with the President of the Competition and
Consumers Protection Office.

30.
So far Poland has not conducted any anti-subsidy actions,
as it has not adopted yet the anti-subsidy law in
conformity with the WTO rules. The respective draft law
has been worked out by the Government and passed to the
Parliament. It should be enacted by the end of 2000.

(c)
Anti-dumping measures

31.
Since the last review Poland initiated four anti-dumping
investigations. Three of them concerned non-WTO members
(China and Belarus). In 1999, under the Law of 11
December 1997 on Protection against Dumped Imports into
the Polish Customs Territory, an anti-dumping
investigation was initiated against a German producer
exporting X-ray films. It has not been completed yet.

(d)
Safeguard measures (Article XIX GATT type)

32.
Safeguard measures within the meaning of Article XIX GATT
1994 and the Agreement on Safeguards have been the most
often applied commercial defense instrument in Poland,
especially since the entrance into force in 1998 of the
new law on protection against excessive imports. Under
the previous safeguard provisions of the Customs Law of
1989 there were three safeguard actions taken in Poland.
Two of them were conducted on a non-discriminatory basis
(certain types of motor vehicles and used
harvester-threshers) and one on a selective basis (urea
and ammonium nitrate originating in six ex-Soviet
republics). Most of 8 cases initiated under the new law
were applied on a selective basis with reference to
regional agreements or bilateral agreements with non-WTO
countries. The only exception was a safeguard proceeding
against excessive imports of coated steel sheets
initiated on erga omnes basis in June 1999.

(iii)
Other trade measures

(a)
Special safeguard in imports of textiles and clothing

33.
In 1999, under the Law of 11 December 1997 on Protection
of Polish Customs Territory against Excessive Imports of
Certain Textiles and Clothing, three safeguard
investigations were initiated: against imports of
textured yarn of polyester originating in Turkey,
synthetic fibers from Republic of Korea and Taiwan, and
certain acrylic yarn from Lithuania.

(b)
Special safeguard in imports of agricultural products

34.
Under the Law of 28 June 1995 on the Principles,
Conditions, and Procedure of Imposing Additional Customs
Duties on Certain Imported Agricultural Products, Poland
may impose additional duties on imports of the majority
of agricultural products covered by tariffication (ca 70%
of all tariff lines for agricultural products). The Law
which is modeled after the special safeguard clause of
the WTO Agreement on Agriculture, became effective upon
Poland's accession to the WTO. The duty may be imposed by
the Minister of Economy on the motion of the Ministry of
Agriculture and Rural Development provided a certain
fixed threshold volume is exceeded or an import price is
10% lower than the threshold price. The volumes in
question as well as a list of agricultural products,
which may be subject to customs duties in a given year,
are updated depending on the situation in the country and
on foreign markets. In practice, the additional duties
were introduced periodically on imports of cut flowers,
pork, poultry, flavor, wheat grain, sugar, starch, hop
cones.

(c)
Protection against balance-of-payments disturbances

35.
A temporary import surcharge of 6% was introduced in the
end of 1992 in view of perceived threat of deterioration
of the balance of payments situation. It was introduced
consistently with the procedures established under
Article XII of GATT by a Decree of the Minister of
Finance and applied as an additional turnover tax until 4
July 1993. Thereafter it was transformed by a Decree of
the Council of Ministers into a separate customs duty.
Since 1 January 1994 the instrument was replaced by the
import surcharge based on the Act adopted by Parliament,
used as a separate border tax levied on all imports. The
surcharge amounting to 6% in 1994 was gradually reduced
(to 5% in 1995 and 3% in 1996) and eliminated by the
beginning of 1997. The surcharge was applied to all
sources of imports, including trading partners with whom
Polands trade relations were based on GATT Article
XXIV.

36.
Under the WTO Agreement on Textiles and Clothing, which
became effective on 1 January 1995, Poland has submitted
the list of products included in the first and second
phases of integration into GATT 1994 comprising over 36%
of the volume of imports in 1990.

(b)
General Agreement on Trade in Services (GATS)

37.
The Polish economy could be included into a group of the
most dynamic developing economies in the world.dynamic
developing economies in the world. Its feature is a
permanently increasing role of services sector. This
sector has become the most important activity for the
Polish economy given its share in employment and its
contribution to GDP. Changes emerging on the Polish
market prove that Poland has been starting to become
similar to the service economy's model that characterises
developed countries.

38.
The process of the liberalization of economy has been
continued steadily. The existing measures which
constitute either limitations to the market access or
national treatment principle are subject to removal. An
example is the elimination of restrictions regarding form
of economic activity of foreign service suppliers.
Foreign entities could now pursuit economic activity in a
form of branches and representative offices. The
remaining barriers to establishment will cease on 1
January 2001.

39.
Poland declares the active participation in the round of
multilateral services negotiations which has started 1
January 2000. Poland does not exclude from the scope of
negotiations either modes of supply or services sector.
Poland thinks the key element of negotiations will be a
modification of the schedules of specific commitments and
lists of MFN exemptions. This process will be based on a
removal of existing restrictions for foreign services and
service suppliers in the form of barriers to market
access and national treatment limitations. Poland, in
particular, takes part in the talks aiming at developing
universal principles concerning qualification
requirements, procedures, technical standards and
licensing requirements which will be binding in the whole
services sector. Poland participates in work concerning
an implementation of relevant GATS rules that will govern
the issues of government procurement and subsidies in the
services sector. Poland is interested in development of
emergency safeguards mechanism, too.

40.
Poland undertook a number of commitments under the WTO
General Agreement of Trade in Services (GATS). They
covered 54 sectors and included among others:
construction, telecommunications, business services,
financial services, and tourism and transport services(2).
In the majority of cases Polands commitments
comprised binding of the existing level of access to the
Polish market. It is worth stressing that the level of
actual liberalization of access to services sector in
Poland is higher than that negotiated with economic
partners.

41.
Poland took active part in the subsequent negotiations on
selected services sectors. Under the Agreement on Basic
Telecommunications signed in 1997 Poland undertook
commitments covering such areas of services as:
telephony, transmission of telex, telegraph and fax data,
lease of lines, television and radio broadcasting,
cellular telephony, satellite telecommunication. As
regards access to the market of all telecommunication
services, the commitments provide that a license or
permit for making the services may be issued exclusively
for agents registered in Poland.

42.
No restrictions have been imposed on most
telecommunication services provided on a cross-border
basis (i.e. from outside Poland) or in the form of
consumption of services by Polish entities abroad.
Foreign entities having their seat in Poland are not
allowed to provide international telephony, telex and
telegraph services till the end of 2002. The
liberalization of telex and telegraph services provided
by foreign legal persons has been offered since 1 January
2000.

43.
Under the Agreement on Financial Services (1995 and
1997)(3) ,
Poland has undertaken commitments on the following types
of financial services: holding deposits, loans, services
involved with payments and money orders, guarantees and
banking securities (excluding guarantees and commitments
by the State Treasury), intermediation in the issue of
all kinds of securities (excluding those issued by the
State Treasury), services provided by trust funds. In the
case of most services Poland did not assume obligations
in the field of market access for cross-border services
(i.e. possibility of consuming services rendered abroad
by citizens of a country; the availability of such
services is linked to the possibilities of transferring
foreign exchange assets abroad). As regards these
services, Poland assumed very limited commitments in the
mode of services provided on the Polish territory by
foreign natural persons.

44.
For the above kinds of services Poland has not assumed
liberalization commitments either in the field of market
access, or in national treatment as regards both
cross-border services and access to services abroad. The
only exception to this approach is the limited assumption
of commitments in the scope of cross-border services and
foreign consumption, for services in the field of
providing and transferring financial information and
processing of financial data. A reservation has been
adopted for the last kind of services that their
provision or utilization requires intermediation of the
public network or another authorized operator.

45.
The largest scope of commitments in access to the market
of financial services refers to services provided by
foreign legal persons having their commercial
representations in Poland, on which some limitations have
been imposed in connection with the binding national
regulations and application of the so-called providence
principle (e.g. a bank can be established exclusively in
a form of a joint-stock company and upon obtaining a
permit).

46.
Similar limitations have been introduced in the case of
services provided by foreign natural persons having their
representations in Poland. However, this restriction is
of no major practical relevance, and only of an
indicative value in view of the fact that liberalization
commitments have not been assumed as regards the market
access for services provided by foreign natural persons
in Poland.

47.
On the other hand, the national treatment principle has
been secured in reference to the third and fourth modes
of providing financial services, which means that foreign
entities will be allowed to provide financial services on
the Polish market on an equal footing with Polish
entities.

48.
Apart from that, a reservation was made supplementing the
opportunities for introduction of new regulations
motivated by providence reasons, which may amend the
binding regulations or introduce new regulations.
Nevertheless, it has been assured that the application of
these regulations will be fully consistent with the
provisions of the Annex to GATS referring to financial
services.

(c)
Agreement on Subsidies and Countervailing Measures

49.
In February 1996 Poland notified the application or the
possibility of application of five types of export
subsidies: income tax allowance on account of investment
related to exports, income tax allowance up to the level
of a half of receipts from exports for entities operating
in special economic zones, programs of financial support
for credit guarantees and program of support for export
contracts insurance by the Export Credits Insurance
Corporation (KUKE)(4).

50.
In accordance with the provision of the Agreement
concerning the transitional period, all these subsidies
should be either abolished or adjusted to WTO rules by
the end of 2001. The first type of the investment
incentives was eliminated on 1 January 2000. Taxpayers
who before 31 December 1999 obtained the right to apply
such incentives may use them till the end of 2002. Income
tax allowances for entities in special economic zones
still apply but no new such zones will be created.

51.
In March 1998 Poland submitted a notification in
accordance with Article 25 of the Agreement on Subsidies(5).
This document covered specific subsidies applied in the
manufacturing sector in 1996 (12 types of subsidies) and
agricultural subsidies applied in 1994-1996 (four types
of subsidies). Moreover, the notification included four
types of export subsidies notified earlier in accordance
with Article 29 of the Agreement on Subsidies.

(d)
Agreement on Trade-Related Investment Measures (TRIMs)

52.
On 28 September 1995 Poland notified one investment
measure inconsistent with the TRIMs Agreement, i.e.
income tax rebate for purchase of cash equipment
registering VAT. This measure resulted in a higher income
tax rebate for the purchasers of domestic cash equipment
as compared to the purchasers of that manufactured abroad
(equipment is considered as domestically produced if
imported components do not exceed 60% of the total cost
of production)(6).
As of 1 January 1997, the tax rebate has been uniformed
with respect to all cash registers in accordance with the
obligation of national treatment provided for in
paragraph 4 of Article 3 of GATT 1994. Therefore Poland,
pursuant to Article 5.2 of the Agreement on TRIMs,
terminated measures notified under Article 5.1 of the
Agreement on TRIMs(7).

(e)
Agreement on Agriculture

53.
In the field of agriculture export subsidies are applied
only to sugar and occasionally to meat exported to the
CIS. The value of those subsidies is much below the
amount provided for in Polands Schedule under the
WTO Agreement on Agriculture.

(f)
Agreement on the Application of Sanitary and
Phytosanitary Measures

54.
Pursuant to this Agreement Poland has established the
National Enquiry Point located at the Ministry of
Agriculture and Rural Development, Department of
Agriculture Production. Since the adoption of this
Agreement Poland has submitted to the Committee on
Sanitary and Phytosanitary Measures 22 notifications on
sanitary measures and three notifications on
phytosanitary measures. Few of them related to emergency
measures undertaken in order to protect human, animal and
plant life or health and most notifications provided for
information on the rules and principles of import and
export of certain animals and plants.

(g)
Agreement on Trade-Related Intellectual Property Rights
(TRIPS)

55.
Polish Government is determined to ensure consequently
the intellectual property protection. Polish legislation
has provided for the growing level of the protection
since 1994 when the new Law on Copyright and Related
Rights was adopted.

56.
Poland has submitted to the Council for TRIPS its
intention to avail itself of the right, under Article
65.3 of the TRIPS Agreement, to delay the date of the
application of the provisions of the Agreement other than
Articles 3, 4 and 5. During the transitional period
Polish legislation has been in full conformity with the
binding provisions of the TRIPS Agreement (Articles 3, 4
and 5 of the TRIPS Agreement).

57.
In 1998, Polish legislation on copyright and related
rights as well as legislation on enforcement related to
copyright and related rights were reviewed. Poland has
subjected itself to the review though was availing itself
of the transitional period under Article 63.3 of the
TRIPS Agreement. The review has proved conformity of the
Polish legislation in these areas with the TRIPS
Agreement except for some provisions.

58.
One of the examples of the conformity with the TRIPS
Agreement is a Regulation on the procedure and operating
principles for Customs Authorities for withholding goods
in case of suspected violation of provisions of
intellectual, commercial and industrial property, issued
in February 1999 by the Council of Ministers in order to
introduce amendments necessary to fulfil requirements of
the Section 4 of the TRIPS Agreement.

59.
The level of Polish protection of intellectual property
rights will go beyond the requirements of the TRIPS
Agreement due to Polands accession to the European
Union. Back
to top

(1)Dziennik
Ustaw  Official Gazette of the Republic of Poland. Back
to text
(2)
Document GATS/SC/71, 15 April 1994 Back
to text(3)The
list of Polands modified commitments in the field
of financial services is included in the document
GATS/SC/71/Suppl. 1, 28 July 1995. Back
to text(4)
WTO document G/SCM/N/9/POL, 23 February 1996. Back
to text
(5)
WTO document G/SCM/N/25/POL, 10 March 1998. Back
to text(6)
WTO document G/TRIMS/N/1/POL/1, 6 October 1995. Back
to text(7)
WTO document G/TRIMS/AN/1/POL/1/Add.1, 16 December 1996. Back
to text